J. D. Vance’s Toaster-Making Dreams Would Burn American Manufacturers

By Dominic Pino

Thursday, August 01, 2024

 

In a campaign speech in Henderson, Nev., on Tuesday, Republican vice-presidential nominee J. D. Vance said, “We believe that a million cheap, knockoff toasters aren’t worth the price of a single American manufacturing job.”

 

This comment came in a segment of his speech that was about the American dream, which is odd. Cheap and abundant household appliances are some of the things that people who move here from other countries love about America. The availability of appliances reflects the relative ease with which the residents of the world’s wealthiest country live their everyday lives.

 

But if your version of the American dream is to make toasters rather than use them, it’s really hard to do that without steel and aluminum. And the trade policies of Donald Trump and Joe Biden, which Vance supports, have made it harder for American manufacturers to buy those metals at low prices.

 

It’s not really possible to find any data on toasters specifically, given that the U.S. toaster industry is so small, but the North American Association of Food Equipment Manufacturers (NAFEM) has over 500 members, most of which are small and medium-sized businesses. They make stoves, ovens, refrigerators, freezers, ice machines, and other food-related equipment. According to the group’s product directory, 15 of its members make at least one kind of toaster.

 

NAFEM wrote a letter to the U.S. trade representative on June 28 about the Section 301 tariffs the Biden administration said it would be imposing on steel and aluminum from China, in keeping with Trump’s trade policies. The stated aim of Section 301 tariffs is to get other countries to change their unfair trade practices, but that isn’t working this time around. “The Section 301 tariffs have resulted in wide-spread repercussions that do not address the alleged source of the problem,” NAFEM’s letter said.

 

Of course, China does engage in unfair trade practices concerning intellectual-property theft, as the letter acknowledges. But NAFEM says that the Section 301 tariffs affect “glues, rubber rods, tubes, sheets, and conveyor belts, insulated food and beverage bags, knives and cutting blades. . . . These items are not impacted by China’s IP practices, nor do they contribute to China’s high-tech ambitions, but they are essential to NAFEM members’ U.S. production processes and business operations.” So much for targeted, strategic tariffs.

 

Does China pay the tariffs? The toaster-makers say no. “The Section 301 tariff actions do not apply pressure on China,” the NAFEM letter said. “Instead, tariff costs are borne by U.S. producers and businesses, like NAFEM members, sourcing inputs from China because U.S. companies cannot or do not produce the raw materials needed.”

 

This next part is worth noting: “Maintaining the tariffs would continue to undermine the intent of the Section 301 actions and [they] are contrary to the Administration’s stated priority of increasing good-paying U.S. manufacturing jobs” (emphasis added).

 

So is this: “Even in instances of growing sales, the costs of tariffs grow with business, forcing NAFEM members to reallocate the funds that would be used for wage increases and additional employees to pay for the increased tariff costs” (emphasis added).

 

And this: “In sum, the costs associated with high tariffs and delayed domestic production directly affect wage increases and discourages increased employment of U.S. workers” (emphasis added).

 

And also this: “In the event that the United States applies significant increased tariffs on certain products subject to Section 301 modifications, NAFEM’s concerns are twofold: NAFEM members expect to lose good-paying U.S. manufacturing jobs directly, followed by a potentially negative business impact on our customers, which include thousands of restaurants, convenience stores, and hotels around the world” (emphasis added).

 

An August 2022 brief from NAFEM to the U.S. International Trade Commission covered the Section 232 tariffs on steel and aluminum in addition to the Section 301 tariffs. “Food safety standards require NAFEM members to use certain food-safe grades of stainless steel in our products,” the brief says, but those grades were hard to source from American steel companies.

 

One American steel company was figuring out how to restart production after a strike, the brief said. Another was assessing how much capacity it had before committing to production. Another was fully booked and likely to restrict production in the future because food-safe stainless steel takes longer to make and making it reduces overall productivity.

 

Of Cleveland-Cliffs, the Ohio-based steel company that was outbid by Nippon Steel to purchase U.S. Steel, the NAFEM brief quotes an American steel-service center as saying, “The fact that they have been late on EVERYTHING just makes this whole scenario worse.”

 

The steel-service centers are the companies that NAFEM members most often buy steel from, and the service centers in turn buy steel from the U.S. and abroad. The service centers submitted tariff-exclusion requests to the Department of Commerce. The exclusion requests were then opposed by — you guessed it — the American steel companies.

 

NAFEM’s August 2022 brief said:

 

For example, Boyd Metals, Inc. (“Boyd”), a full-line steel service center founded in Fort Smith, Arkansas, has submitted Section 232 exclusion requests for stainless steel grade 304 that will be used in food processing facilities and holding tanks. In several recent 2022 exclusion requests, Boyd explains it requires an exclusion request because Outokumpu and North American Stainless have declined to sell the steel products due to allocation. . . . North American Stainless filed objections and stated that it has the capability to produce the product. However, in reply, Boyd’s director of procurement produced an email exchange where North American Stainless notes that “cold rolled {steel} is tight and we aren’t expecting to see much of a change until Q1 of {2023}.”

 

Cleveland-Cliffs also filed an objection to a recent exclusion request and stated it is capable of producing the steel product to the requirements outlined in the exclusion request. Boyd responded that “Cleveland Cliffs has not been willing to offer us 304L tons for two years.”

 

To recap: U.S. food-equipment manufacturers can’t buy steel from abroad at a low price because the government says they can’t. So they turn to American steel companies, who are either incapable of making the right kinds of steel or incapable of delivering it in a timely manner or at a reasonable price. And if the food-equipment manufacturers then complain to the government about that, the American steel companies counter-complain to say they do have the capacity to deliver the steel that they aren’t delivering.

 

Remember, this whole shebang is supposed to help U.S. manufacturers, politicians such as Vance tell us.

Personally, I’d rather live in a country that imports cheap toasters than produces them. The government could eliminate all tariffs tomorrow, and the U.S. would still import nearly all of its toasters, given the wage rates in different parts of the world. But if Vance cares about manufacturing jobs in general, as he claims to do, he should listen to the toaster-makers about tariffs.